Half-yearly Report
NEW STAR INVESTMENT TRUST PLC
INTERIM REPORT
for the six months ended 31st December 2012
INVESTMENT OBJECTIVE
The Company's objective is to achieve long-term capital growth.
REGISTERED OFFICE
1 Knightsbridge Green, London, SW1X 7QA
Company Number 3969011
COMPANY INFORMATION
DIRECTORS
G Howard-Spink (Chairman)
J L Duffield (Deputy Chairman)
M J Gregson
INVESTMENT MANAGER
Brompton Asset Management LLP
1 Knightsbridge Green, London SW1X 7QA
(Authorised and Regulated by the Financial Services Authority)
SECRETARY AND ADMINISTRATOR
Phoenix Administration Services Limited
Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW
Telephone: 01245 398950 Facsimile: 01245 398952
SOLICITORS
Olswang LLP
90 High Holborn, London WC1V 6XX
AUDITORS
Ernst & Young LLP
1 More London Place, London SE1 2AF
CUSTODIAN
Brown Brothers Harriman & Co
Park House, 16 - 18 Finsbury Circus, London EC2M 7EB
REGISTRARS
Equiniti Limited
Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA
Telephone: 0871 384 2549
(calls cost 8p per minute plus network charges)
Website: www.shareview.co.uk
WEBSITE
www.nsitplc.com
The Company's shares are traded on the London Stock Exchange and their prices
are shown in the Financial Times under "Investment Companies".
FINANCIAL HIGHLIGHTS
31st December 30th June %
2012 2012
Change
PERFORMANCE 71,691 68,067 5.3
Net assets (£'000) 71,691 68,067 5.3
Net asset value per Ordinary share 100.94p 95.84p 5.3
Mid-market price per Ordinary share 63.50p 66.50p (4.5)
Discount of share price to net asset value 37.1% 30.6% n/a
FTSE World Index (total return, sterling
adjusted) 641.59 603.27 6.4
FTSE All-Share Index (total return) 4,458.04 4,101.28 8.7
Six months Six months
ended ended
31st December 31st December
2012 2011
REVENUE
Return per Ordinary share 0.24p 0.02p
Dividend per Ordinary share - -
TOTAL RETURN
Net assets 5.3% (8.1)%
FTSE World Index 6.4% (8.2)%
CHAIRMAN'S STATEMENT
Your Company's net assets rose 5.3% to £71.7 million over the half year to 31st
December 2012. Over this period, the FTSE World Total Return Index gained 6.4%
while the FTSE All-Share Total Return Index gained 8.7%. At the period end, the
net asset value per ordinary share was 100.94p. The Company's cautious positioning,
with cash and cash equivalents accounting for a substantial proportion of its assets,
was the principal factor behind this marginal underperformance relative to global equities.
The net revenue gain for the period was £172,000. As in previous years, your
directors are not recommending payment of an interim dividend to shareholders.
Market review
Increasing optimism that the eurozone crisis would be resolved was a key driver
of stockmarkets over the period under review. Shares began to rally in late
July after Mario Draghi, the European Central Bank (ECB) president, said he was
`ready to do whatever it takes to preserve the euro' adding that `believe me,
it will be enough'. Policy action, he said, could include buying bonds issued
by weaker member countries to drive down yields.
A second factor was the evidence that the US was regaining economic momentum
and that Congress would agree terms to prevent the country going over its
`fiscal cliff', triggering mandatory tax rises and budget cuts of such size
that recession would result. The US reported economic growth for the second and
third quarters of 2012 in contrast to the eurozone, which contracted as a
result of recessions in Greece, Italy, Portugal and Spain.
Monetary authorities responded to economic strains with various initiatives.
The ECB reduced its repo rate by a quarter percentage point to 0.75% in July
while the Bank of England announced a £50 billion increase in its asset
purchase programme. In September, the US Federal Reserve announced `QE3', an
open-ended $40-billion-a-month programme to buy mortgage-backed securities,
adding that it would maintain ultra-low interest rates until 2015. The dollar
weakened in response, falling 3.5% against sterling and 3.7% against the euro.
Geographically, emerging markets outperformed, gaining 9.9%, with Asia
returning 11.3%. Among developed markets, Europe excluding the UK gained 15.3%.
Currency weakness affected Japanese and US returns, up 1.3% and 2.4%
respectively. At the sector level, financial stocks outperformed as euro
confidence revived, returning 14.1%. Other strong sectors included industrials,
up 9.2%, and basic materials, up 7.4%. Defensive areas were weak, with
utilities down 0.9%. In bond markets, reviving eurozone confidence resulted in
outperformance among peripheral countries such as Italy and Spain, where
government bonds returned 11.4% and 9.8% respectively. Emerging market bonds
also outperformed, returning 6.5%. By contrast, UK gilts returned 0.7%.
Portfolio review
During the period under review, a net £4.2 million was invested in markets,
with seven holdings added, two sold and four reduced. Of the additions, IFDS
Brompton Global Income and IFDS Brompton Diversified are multi-asset class
funds while Brompton UK Quant invests in UK equities. In Asia, the company
bought First State Indian Subcontinent while Liontrust Asia Income was
substituted for Liontrust Asia. In Europe, Standard Life European Income was
substituted for SW Mitchell Small Cap European while Fidelity Global
Inflation-Linked Bond was added in fixed income. The partial disposals
comprised Atlantis China, Henderson Private Equity, M&G Optimal Income and
Polar Capital Global Technology.
Your Company ended the period with 62.5% of its assets in retail funds, 5.2% in
investment trusts, 3.8% in exchange-traded funds, 3.2% in hedge funds, 7.2% in
other securities and 18.1% in cash. Geographically, the biggest non-cash
exposures were the UK, at 22.3%, Europe excluding the UK, at 12.8%, and
emerging markets, at 12.4%. In asset class terms, the biggest non-cash holdings
were in equities, at 61.6%, and commodities, at 11.2%.
Outlook
Economic growth is likely to regain momentum in 2013 for various reasons.
First, the global inflation-adjusted money supply, typically a precursor of
economic growth, was expanding in late 2012. The strongest growth was in the US
and the eurozone core countries while Japanese and UK monetary conditions were
also improving. Secondly, yield spreads between high-quality and low-quality
bonds narrowed in late 2012, improving the prospects for companies wishing to
raise capital. Thirdly, sentiment among businesses and consumers, though not
universally positive, was broadly robust. One reason for this was the gradual
US house price recovery; another was that US financial service burdens as a
percentage of disposable incomes had fallen to levels not seen since the 1980s.
The degree to which such trends will feed through into sustained stockmarket
performance is, however, unclear. Sentiment among global fund managers ended
2012 near the top of its recent range, suggesting possible over-optimism. This
may lead to selling at some point. One possibility is that economic growth
might pick up to the point where the liquidity created by inflation-adjusted
money supply rises is absorbed. Such a trend may be felt first in bond markets,
leading to pressure on equity valuations. In such circumstances, relative
performance among stocks and sectors is likely to vary significantly,
emphasising the importance of security selection in generating performance.
The published unaudited net asset value at 31st January 2013 was 106.24p per
ordinary share.
Geoffrey Howard-Spink
Chairman
22nd February 2013
DIRECTORS' REPORT
Performance
In the six months to 31stDecember 2012 the net asset value per Ordinary share
increased by 5.3% to 100.94p. In the same period the share price decreased by
4.5% to 63.50p. This compares to increases of 8.7% and 6.4% respectively in the
FTSE All Share Index and the FTSE World Index. Further details of the Company's
performance may be found in the Chairman's Statement.
Investment objective
The Company's investment objective is to achieve long-term capital growth.
Investment policy
The Company's investment policy is to allocate assets to global investment
opportunities through investment in equity, bond, commodity, real estate,
currency and other markets. The Company's assets may have significant
weightings to any one asset class or market, including cash.
The Company will invest in pooled investment vehicles, exchange traded funds,
futures, options, limited partnerships and direct investments in relevant
markets. The Company may invest up to 15% of its net assets in direct
investments in relevant markets.
The Company will not follow any index with reference to asset classes,
countries, sectors or stocks. Aggregate asset class exposure to any one of the
United States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan or
Emerging Markets and to any individual industry sector will be limited to 50%
of the Company's net assets, such values being assessed at the time of
investment and for funds by reference to their published investment policy or,
where appropriate, their underlying investment exposure.
The Company may invest up to 20% of its net asset value in unlisted securities
(excluding unquoted pooled investment vehicles) such values being assessed at the time of
investment.
The Company will not invest more than 15% of its net assets in any single investment, such
values being assessed at the time of investment.
Derivative instruments and forward foreign exchange contracts may be used for
the purposes of efficient portfolio management and currency hedging. Derivatives
may also be used outside of efficient portfolio management to meet the Company's investment
objective. The Company may take outright short positions in relation to up to
30% of its net assets, with a limit on short sales of individual stocks of up to 5% of its net
assets, such values being assessed at the time of investment. The Company may
borrow up to 30% of net assets for short-term funding or long-term investment
purposes. No more than 10%, in aggregate, of the value of the Company's total
assets may be invested in other closed-ended investment funds except where such
funds have themselves published investment policies to invest no more than 15%
of their total assets in other listed closed-ended investment funds.
Share capital
The Company's share capital comprises 305,000,000 Ordinary shares of 1p each,
of which 71,023,695 (2011: 71,023,695) have been issued fully paid. No Ordinary
shares are held in treasury, and none were bought back or issued during the six
months to 31st December 2012.
Risk management
The principal risks associated with the Company that have been identified by
the Board, together with the steps taken to mitigate them, are as follows:
Investment strategy: inappropriate long-term strategy, asset allocation and
manager selection might lead to the underperformance of the Company. The
Company's strategy is kept under regular review by the Board. Investment
performance is discussed at every Board meeting and the Directors receive a
monthly report which details the Company's asset allocation, portfolio changes
and performance.
Business conditions and general economy: the Company's investment returns are
influenced by general economic conditions in the UK and globally. Factors such
as interest rates, inflation, investor sentiment and the availability and cost
of credit could adversely affect investment returns. The Board regularly
considers the economic environment in which the Company operates. The portfolio
is managed with a view to mitigating risk by investing in a spread of different
asset classes and geographic regions.
Portfolio risks - market price, foreign currency and interest rate risks: the
downward valuation of investments contained in the portfolio would lead to a reduction in the
Company's net asset value. A proportion of the Company's portfolio is invested in investments
denominated in foreign currencies and movements in exchange rates can significantly affect
their sterling value. It is the Board's policy to hold an appropriate spread of investments
in order to reduce the risk arising from factors specific to a particular
investment or sector. The Investment Manager takes account of foreign currency
risk and interest rate risk when making investment decisions.
The Company does not normally hedge against foreign currency movements
affecting the value of the investment portfolio, although hedging techniques
may be employed in appropriate circumstances.
Investment Manager: the quality of the management team employed by the
Investment Manager is an important factor in delivering good performance and
the loss by the Investment Manager of key staff could adversely affect
investment returns. With effect from the beginning of 2011 the Company's
portfolio has been managed by Gill Lakin. The Board receives a monthly
financial report which includes information on performance, and a
representative of the Investment Manager attends each Board meeting. The Board
is kept informed of any personnel changes to the investment team employed by
the Investment Manager.
Tax and regulatory risks: a breach of sections 1158 to 1165 Corporation Tax Act
2010 could lead to a loss of investment trust status, resulting in capital
gains realised within the portfolio being subject to United Kingdom capital
gains tax. A breach of the UKLA Listing Rules could result in suspension of the
Company's shares, while a breach of company law could lead to criminal
proceedings, or financial or reputational damage. The Board employs Brompton
Asset Management LLP as Investment Manager and Phoenix Administration Services
Limited as Company Secretary and Administrator to help manage the Company's
legal and regulatory obligations. The Board receives a monthly financial report
which includes information on the Company's compliance with section 1158.
Operational: disruption to, or failure of, the Investment Manager's and
Administrator's accounting, dealing or payment systems or the Custodian's records
could prevent the accurate reporting and monitoring of the Company's financial
position. The Company is also exposed to the operational risk that one or more
of its suppliers may not provide the required level of service.
Investment Management Arrangements and Related Party Transactions
In common with most investment trusts the Company does not have any executive
directors or employees. The day-to-day management and administration of the
Company, including investment management, accounting and company secretarial
matters, and custodian arrangements are delegated to specialist third party
service providers.
Details of related party transactions are contained in the Annual Report. There
have been no material transactions with related parties during the period which
have had a significant impact on the performance of the Company.
Going Concern
The Directors believe that it is appropriate to continue to adopt the going
concern basis in preparing the accounts as the assets of the Company consist
mainly of securities that are readily realisable or cash and it has no
significant liabilities. Accordingly, the Company has adequate financial
resources to continue in operation existence for the foreseeable future.
Auditors
The half year financial report has been reviewed, but not audited, by Ernst &
Young LLP pursuant to the Auditing Practices Board guidance on the Review of Interim
Financial Information.
Responsibility statement
The Directors named on page 2 confirm that to the best of their knowledge:
* The condensed set of financial statements contained within the half year
financial report to 31st December 2012 has been prepared in accordance with
International Accounting Standard 34 `Interim Financial Reporting';
* The Chairman's statement includes a fair review of important events that
have occurred during the first six months of the financial year and their
impact on the financial statements;
* The Chairman's statement includes a fair review of the potential risks and
uncertainties for the remaining six months of the year;
* The Director's report includes a fair review of the information concerning
related party transactions and changes since the last annual report.
By order of the Board
Phoenix Administration Services Limited
22nd February 2013
INDEPENDENT REVIEW REPORT
TO NEW STAR INVESTMENT TRUST PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half year financial report for the six months ended 31st
December 2012 which comprises the consolidated statement of comprehensive
income, consolidated statement of changes in equity, consolidated balance
sheet, consolidated cash flow statement and related explanatory notes 1 to 8.
We have read the other information contained in the half year financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with guidance contained
in International Standard on Review Engagements 2410 (UK and Ireland) "Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half year financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half year financial
report in accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The condensed set of
financial statements included in this half year financial report has been prepared in
accordance with International Accounting Standard 34, "Interim Financial Reporting", as
adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half year financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing Practices
Board for use in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly financial report for
the six months ended 31st December 2012 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Services
Authority.
Ernst & Young LLP
London
22nd February 2013
SCHEDULE OF TOP TWENTY INVESTMENTS
at 31st December 2012
Holding Activity Bid-market
Investment
value % of
£'000 portfolio
Henderson Euro Special Situations Investment Fund 7,798 13.21
BlackRock Gold & General Fund Investment Fund 5,361 9.08
Investec Africa Fund Investment Fund 4,010 6.79
Fundsmith Equity Fund Investment Fund 3,881 6.57
Artemis UK Special Situations Fund Investment Fund 3,023 5.12
Trojan Investment Fund Investment Fund 3,002 5.09
Gold Bullion Securities ETF Fund Exchange Traded 2,733 4.63
Brompton UK Quant Fund Investment Fund 2,582 4.37
Aquilus Inflection Fund Investment Fund 2,265 3.84
Aberforth Geared Income Trust Investment Company 2,124 3.60
IFDS Brompton Income Fund Investment Fund 1,752 2.97
IFDS Brompton Diversified Fund Investment Fund 1,697 2.87
Neptune Russia & Greater Russia Fund Investment Fund 1,604 2.72
First State Indian Subcontinent Fund Investment Fund 1,562 2.65
Polar Capital Global Technology Fund Investment Fund 1,550 2.63
PFS Brompton UK Recovery Unit Trust Investment Fund 1,512 2.56
Standard Life Investment Euoprean Income Investment Fund 1,456 2.47
M&G Optimal Income Fund Investment Fund 1,450 2.46
Fidelity Global Inflation Linked Investment Bond Fund 1,427 2.42
Aberdeen Asia Pacific Fund Investment Fund 1,293 2.19
52,082 88.24
Balance held in 16 investments 6,939 11.76
Total investments 59,021 100.00
The investment portfolio can be further analysed as
follows:
Equities (including investment companies) 5,683
Loan 213
Investment funds and ETFs 53,125
59,021
All the Company's investments are either unlisted or are unit trust/OEIC funds
with the exception of Henderson Private Equity Investment Trust, Aberforth
Geared Income Trust, BH Global Limited, MAM Funds, Gold Bullion Securities ETF,
Immedia Broadcasting, Westhouse Holdings and Bumi Plc.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2012
Six months ended
31st December 2012
(unaudited)
Notes Revenue Capital Total
Return Return Return
£'000 £'000 £'000
INCOME
Investment income 486 - 486
Other operating income 3 - 3
Total income 2 489 - 489
GAINS AND LOSSES ON INVESTMENTS
Gains on investments at fair value
through profit or loss - 3,771 3,771
Other exchange losses - (281) (281)
Management fee rebates - 26 26
489 3,516 4,005
EXPENSES
Management fees 3 (244) - (244
Other expenses (115) - (115)
(359) - (359)
PROFIT BEFORE FINANCE COSTS AND TAX 130 3,516 3,646
Finance costs - - -
PROFIT BEFORE TAX 130 3,516 3,646
Tax 42 (64) (22)
PROFIT FOR THE PERIOD 172 3,452 3,624
EARNINGS PER SHARE
Ordinary shares (pence) 4 0.24 4.86 5.10
The total column of this statement represents the Group's profit and loss
account, prepared in accordance with IFRS. The supplementary revenue return and
capital return columns are both prepared under guidance published by the
Association of Investment Companies. All items in the above statement derive
from continuing operations. No operations were acquired or discontinued during
the period.
All income is attributable to the equity holders of the parent company. There
are no minority interests.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the six months ended 31st December 2011 and the year ended 30th June 2012
Six months ended Year ended
31st December 2011 30th June 2012
(unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return
£'000 £'000 £'000 £'000 £'000 £'000
INCOME
Investment income 318 - 318 468 - 468
Other operating income 5 - 5 17 - 17
Total income 2 323 - 323 485 - 485
GAINS AND LOSSES ON INVESTMENTS
Losses on investments at fair
value through profit or loss - (6,779) (6,779) - (7,824) (7,824)
Other exchange gains - 189 189 - 65 65
Management fee rebates - 70 70 - 141 141
323 (6,520) (6,197) 485 (7,618) (7,133)
EXPENSES
Management fees 3 (255) - - (513) - (513)
VAT Recovery - - - 35 - 35
Other expenses (121) - (121) (249) - (249)
(376) - (376) (727) - (727)
LOSS BEFORE FINANCE
COSTS AND TAX (53) (6,520) (6,573) (242) (7,618) (7,860)
Finance costs - - - - - -
LOSS BEFORE TAX (53) (6,520) (6,573) (242) (7,618) (7,860)
Tax 68 355 423 164 279 443
PROFIT/(LOSS)FOR THE PERIOD 15 (6,165) (6,150) (78) (7,339) (7,417)
EARNINGS PER SHARE 4 0.02 (8.68) (8.66) (0.11) (10.33) (10.44)
Ordinary shares (pence)
The total column of this statement represents the Group's profit and loss
account, prepared in accordance with IFRS. The supplementary revenue return and
capital return columns are both prepared under guidance published by the
Association of Investment Companies. All items in the above statement derive
from continuing operations. No operations were acquired or discontinued during
the periods.
All income is attributable to the equity holders of the parent company. There
are no minority interests.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2012
(unaudited)
Share Share Special Retained
capital premium reserve earnings Total
£'000 £'000 £'000 £'000 £'000
AT 30TH JUNE 2012 710 21,573 56,908 (11,124) 68,067
Total comprehensive income for
the period - - - 3,624 3,624
AT 31ST DECEMBER 2012 710 21,573 56,908 (7,500) 71,691
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2011
(unaudited)
Share Share Special Retained
capital premium reserve earnings Total
£'000 £'000 £'000 £'000 £'000
AT 30TH JUNE 2011 710 21,573 56,908 (3,707) 75,484
Total comprehensive income for
the period - - - (6,150) (6,150)
AT 31ST DECEMBER 2011 710 21,573 56,908 (9,857) 69,334
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2012
(audited)
Share Share Special Retained
capital premium reserve earnings Total
£'000 £'000 £'000 £'000 £'000
AT 30TH JUNE 2011 710 21,573 56,908 (3,707) 75,484
Total comprehensive income for
the year - - - (7,417) (7,417)
AT 30TH JUNE2012 710 21,573 56,908 (11,124) 68,067
CONSOLIDATED BALANCE SHEET
at 31st December 2012
Notes 31st 31st
December December 30th June
2012 2011 2012
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
NON-CURRENT ASSETS
Investments at fair value
through profit or loss 5 59,021 52,245 51,140
CURRENT ASSETS
Other receivables 74 138 127
Cash and cash equivalents 12,980 17,321 17,181
13,054 17,459 17,308
TOTAL ASSETS 72,075 69,704 68,448
CURRENT LIABILITIES
Other payables (213) (201) (232)
TOTAL ASSETS LESS CURRENT LIABILITIES 71,862 69,503 68,216
NON-CURRENT LIABILITIES
Deferred tax liability (171) (169) (149)
NET ASSETS 71,691 69,334 68,067
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS
Called-up share capital 6 710 710 710
Share premium 21,573 21,573 21,573
Special reserve 56,908 56,908 56,908
Retained earnings (7,500) (9,857) (11,124)
TOTAL EQUITY 71,691 69,334 68,067
NET ASSET VALUE PER ORDINARY 7 100.94 97.62 95.84
SHARE (PENCE)
This half year report was approved and authorised for issue by the Board on
22nd February 2013.
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31st December 2012
Six months Six months
ended ended Year
31st 31st ended
December December 30th June
2012 2012 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
NET CASH INFLOW/(OUTFLOW)FROM
OPERATING ACTIVITIES 194 (31) (107)
FINANCIAL INVESTMENT
Purchase of investments (13,258) (2,518) (5,415)
Sale of investments 9,144 4,186 7,143
NET CASH(OUTFLOW)/INFLOW FROM
FINANCIAL INVESTMENT (4,114) 1,668 1,728
EQUITY DIVIDENDS PAID - - -
NET CASH (OUTFLOW)/INFLOW BEFORE
FINANCING (3,920) 1,637 1,621
FINANCING - - -
(DECREASE)/INCREASE IN CASH (3,920) 1,637 1,621
RECONCILIATION OF NET CASH FLOW TO
MOVEMENT IN NET FUNDS
(Decrease)/increase in cash
resulting from cash flows (3,920) 1,637 1,621
Exchange movements (281) 189 65
Movement in net funds (4,201) 1,826 1,686
Net funds at start of period/year 17,181 15,495 15,495
NET FUNDS AT END OF PERIOD / YEAR 12,980 17,321 17,181
RECONCILIATION OF PROFIT/(LOSS)
BEFORE FINANCE COSTS AND TAXATION
TO NET CASH FLOW FROM OPERATING
ACTIVITIES
Profit/(loss) before finance costs 3,646 (6,573) (7,860)
and taxation
(Gains)/losses on investments (3,771) 6,779 7,824
Exchange differences 281 (189) (65)
Management fee rebates (26) (70) (141)
Net profit/(loss) before finance
costs and taxation 130 (53) (242)
(Increase)/decrease in debtors 22 (12) 14
(Decrease)/increase in creditors (19) (20) 11
Taxation 35 (16) (31)
Management fee rebates 26 70 141
NET CASH INFLOW/(OUTFLOW)FROM 194 (31) (107)
OPERATING ACTIVITIES
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 31st December 2012
1. Accounting policies
The consolidated half year financial statements on pages 15 to 24 comprise the
unaudited results of the Company and its subsidiary, JIT Securities Limited,
for the six months to 31st December 2012. The comparative information for the
six months to 31st December 2011 and the year to 30th June 2012 do not
constitute statutory accounts under the Companies Act 2006. Full statutory
accounts for the year to 30th June 2012 included an unqualified audit report,
did not contain any statements under section 498 of the Companies Act 2006, and
have been filed with the Registrar of Companies.
The half year financial statements have been prepared in accordance with
International Accounting Standard 34 `Interim Financial Reporting', and are
presented in pounds sterling, as this is the Group's functional currency.
The same accounting policies have been followed in the interim financial
statements as applied to the accounts for the year ended 30th June 2012, which
are prepared in accordance with IFRSs as adopted by the European Union.
2. Total income
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2012 2011 2012
£'000 £'000 £'000
Income from Investments1
UK net dividend income 418 238 310
UK unfranked investment income 68 80 158
486 318 468
Operating Income
Bank interest receivable 3 5 10
VAT reclaim interest received from
HMRC - - 7
3 5 17
2. Total income continued
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2012 2011 2012
£'000 £'000 £'000
Total income comprises
Dividends 486 318 468
Other income 3 5 17
489 323 485
3. Management fees
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2012 2011 2012
£'000 £'000 £'000
Investment management 244 255 513
Performance fee - - -
244 255 513
The management fee is payable in arrears and is calculated at a rate of 3/16%
per quarter of the total assets of the Company and its subsidiary after the
deduction of the value of any investments managed by the Investment Manager (as
defined in the management agreement). The Investment Manager is also entitled
to a performance fee of 15% of the growth in net assets over a hurdle of
3-month Sterling LIBOR plus 1% per annum, payable six monthly in arrears,
subject to a high water mark. The aggregate of the Company's management fee and
any performance fee are subject to a cap of 4.99% of net assets in any
financial year (with any performance fee in excess of this cap capable of being
earned in subsequent periods). The performance fee will be charged 100% to
capital, in accordance with the Board's expectation of how any out-performance
will be generated. No performance fee is payable for any period.
4. Return per Ordinary share
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2012 2011 2012
£'000 £'000 £'000
Revenue return 172 15 (78)
Capital return 3,452 (6,165) (7,339)
Total return 3,624 (6,150) (7,417)
Weighted average number of Ordinary 71,023,695 71,023,695 71,023,695
shares
Revenue return per Ordinary share 0.24p 0.02p (0.11)p
Capital return per Ordinary share 4.86p (8.68)p (10.33)p
Total return per Ordinary share 5.10p (8.66)p (10.44)p
5. Investments at fair value through profit or loss
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2012 2011 2012
£'000 £'000 £'000
GROUP AND COMPANY 59,021 52,245 51,140
ANALYSIS OF INVESTMENT
PORTFOLIO - GROUP AND COMPANY
Six months ended 31st December 2012
Listed* Unlisted Total
£'000 £'000 £'000
Opening book cost 45,048 4,943 49,991
Opening investment holding gains/
(losses) 3,904 (2,755) 1,149
Opening valuation 48,952 2,188 51,140
Movement in period:
Purchases at cost
Sales 13,258 - 13,258
- Proceeds (9,007) (141) (9,148)
- Realised gains on sales 1,293 6 1,299
Investment holding gains/(losses)
2,898 (426) 2,472
Closing valuation 57,394 1,627 59,021
Closing book cost 50,592 4,808 55,400
Unrealised investment holding gains/ 6,802 (3,181) 3,621
(losses)
Closing valuation 57,394 1,627 59,021
* Listed investments include unit trust and OEIC funds
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2012 2011 2012
£'000 £'000 £'000
ANALYSIS OF CAPITAL GAINS AND LOSSES
Realised gains on sales of 1,299 1,616 2,191
investments
Decrease in investment holding gains 2,472 (8,395) (10,015)
3,771 (6,779) (7,824)
6. Retained earnings
The components of retained earnings are set out below:
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2012 2011 2012
£'000 £'000 £'000
Capital reserve - realized (11,024) (12,561) (12,040)
Capital reserve - revaluation 3,312 2,571 876
Revenue reserve 212 133 40
(7,500) (9,857) (11,124)
7. Net asset value per Ordinary share
31st 31st 30th
December December June
2012 2011 2012
£'000 £'000 £'000
Net assets attributable to Ordinary 71,691 69,334 68,067
shareholders
Ordinary shares in issue at end of 71,023,695 71,023,695 71,023,695
period
Net asset value per Ordinary share 100.94p 97.62p 95.84p
8. Related party transactions
There have been no related party transactions that have materially affected the
financial position or performance of the Group. The Company has four (2011:
one) investments managed by the Investment manager.
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